https://hmpi.org/2017/09/08/scenario-planning-tools-for-organizations-struggling-with- healthcare-reform-uncertainty-the-case-of-oscar-health-insurance/

Planning and Forecasting Scenarios

Introduction

Mariton (2016) stated that Scenario Planning is formulating assumptions to foreseeing the future and assessing how one’s business environment changes overtime regarding that future. In other words, Scenario type Planning is recognizing a set of uncertainties, various “realities” of what could happen in the future of the business. Traditional forecasting, on the other hand, is when one leverages past and current happenings to predict the ultimate possible outcome in the forthcoming (Deal, 2019). Usually traditional forecasting utilizes historical quantitative methods (Saulsgiver,2018). Such methods predict happenings in the future depending on data from the past and present which makes it very rigid risk management assessment.

Here a case study that missed proper scenario type planning but relied only on standard forecasting will be introduced. Arising from that gap, we will be discussing how scenario-type planning support planning and innovation for change, forces involved and their impacts,  demonstrate an appropriate illustration or model, personal plan to uses scenario planning for future innovation efforts, and  explain if scenario planning account for the social impact of change.

1.       How does scenario-type planning support planning and innovation for change?

The case study here to explain is about a pizza or any similar food delivery business as explained by Deal (2019).  One could utilize data of ordered pizza over the last five Superbowl’s to forecast sufficient pizza, chefs, drivers, etc. could be required for the future Superbowl. However, if there are any data fluctuations or there is any unseen situations, the past information will not probably give a precise representation of the data (Posadas, 2017). For instance, a Pizza selling company found in Denver, CO and a Superbowl event in the city may twist the predicted values may be seen higher demand because of the nearness of the teams playing. Another big uncertainty that may affect the forecasted numbers is the rapid weather fluctuation in Colorado. Fluctuated weather in Denver such as snowstorm may impact transportation time which would make significant delayed in delivery. Looking multiple uncertainty scenarios such as bad weather, higher customer demand and others, the owners could come with feasible solutions such as hiring more drivers than instore employees to achieve customer demands for pizza while managing the weather situation, and so on. Scenario type planning plays a great job to assist such in administration process by attempting to assess various variables that impact a decision. However, traditional forecasting usually fails due reason that past or historic data does not exactly represent the future during dynamic nature.

2.       What forces are involved, and what impacts do they make?

The forces that drive in the above scenarios are mostly economical and societal demands. Business owners want to consistently live sustainable and look ahead to the future to deal with the possible uncertainties that could affect their business. That means they look forward to looking the best scenarios that could get them profit and serve their communities.

3.       Include an appropriate illustration or a model.

Scenario planning is a strategic instrument which has been created particularly to address the most critical uncertainties in an organization aspect (Lefferts et al., 2019. This can be well illustrated as in Figure 1 below which compares both traditional forecasting and scenario type planning.  

Figure1: Forecast Planning vs Scenario Planning (Lefferts et al., 2019)

The illustration (Figure1) tells us that though scenario planning does not predict any outcome, it is an instrument to direct business owners to study various likelihood futures and that allow them to prepare ahead for whatsoever the future holds.

4.       How will you use scenario planning for future innovation efforts and the impact implied?

Scenario planning intentions to identify future vital uncertainty scenarios and prepare some reasonable scenarios to assess the influences and possible responses for each scenario. As can be seen from Figure 2 below, scenario development process has four significant steps (Mariton, 2016). These are:

·       Identify your driving forces: The process would better to start with the driving forces that is discussing what significant change in technology, economics, politics, and societal impacts in the future will be and assess their impacts or risks.

·       Identify your critical uncertainties: This is to pick up only two of the most critical uncertainties from the list that most impact on one’s business.

·       Develop a range of plausible scenarios: The model may be represented with a matrix in which two of the critical uncertainties as axis. From that, it is possible to represent four possible scenarios for the future utilizing any of the directions each of the uncertainties construct. 

·       Discuss the implications: In this final stage, one need to discuss the different impacts and implications of each scenario. Then one need to start to put strategies by accounting every scenario.

Figure 2: Scenario Development Process (Mariton (2016)

Conclusion:

Let me conclude by quoting a statement from an article posted in Forbs by Ogilvy (2015) that states, “What if we're wrong? Scenario planning guards against the dangers of placing all of the organization's eggs into the basket of just one forecast, however well founded that forecast may be.” 

Reference

1.       Mariton, j., (2016). What is Scenario Planning and How to Use It.                                                         https://www.smestrategy.net/blog/what-is-scenario-planning-and-how-to-use-it

2.       Deal, J., (2019). Scenario Planning Vs. Traditional Forecasting.                                                                               https://www.n6networks.com/single-post/2019/02/04/scenario-planning-vs-traditional-        forecasting.

3.       Saulsgiver, M., (2018).  Scenario Planning versus Forecasting.

https://sfginc.com/scenario-planning-versus-forecasting/

4.       Posadas, S. (2017). When traditional forecasting doesn’t fit - Clockwork Solutions.                                                     Retrieved from https://clockwork-solutions.com/traditional-forecasting-doesnt-fit/

5.       Lefferts, M., Liu, T., & Friedlander, J., (2017). Scenario Planning Tools For Organizations Struggling                     With Healthcare Reform Uncertainty – The Case Of Oscar Health Insurance. Health Management   Policy and Innovation, Volume 2, Issue 2.                                   

        https://hmpi.org/2017/09/08/scenario-planning-tools-for-organizations-struggling-with-healthcare-reform-uncertainty-the-case-of-oscar-health-insurance/

6. Ogilvy, J., (2015).  Scenario Planning and Strategic Forecasting.        https://www.forbes.com/sites/stratfor/2015/01/08/scenario-planning-and-strategic-forecasting/?sh=563f7c5f411a